Monday, 18 November 2024
The NSE Nifty 50 dipped below the crucial 200-day moving average (DMA) for the first time in 19 months last week, signalling a correction as it slides over 10% from its peak. The index is now under close scrutiny by market participants, with technical indicators providing mixed signals.
Nifty technical outlook
On the daily chart, the Nifty has formed a doji candle near its 200-day exponential moving average (DEMA) at approximately 23,540, indicating uncertainty in the market. According to Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Intermediates, the immediate support zone lies between 23,500 and 23,540.
A decisive breach below 23,500 could lead the index further down to the 23,200-23,300 levels, where a trend line support is anticipated. While the short-term trend remains bearish, the Nifty has a chance for a pullback rally if it sustains above the 23,500 mark.
Bank nifty analysis
The Bank Nifty presents a slightly different picture. The index has formed an inverted hammer candle near its 200-DEMA support at 49,900, suggesting potential resilience. Should this level hold, analysts predict a rebound towards the 50,500-50,600 zone.
Options data: Nifty and bank nifty
The options data paints a bearish outlook for the Nifty. Significant call writing activity between 23,600 and 24,000 reflects strong resistance, while diminishing put writing indicates waning confidence among bullish traders. The Put-Call Ratio (PCR) has edged higher from 0.54 to 0.73, signalling cautious optimism, while the maximum pain point—a level where most options contracts would expire worthless—stands at 23,550.
For the Bank Nifty, bearish sentiment persists, with call writing intensifying in the 50,500 to 51,000 range. The PCR for Bank Nifty rose to 0.96, underscoring a guarded stance among market participants. The maximum pain level is identified at 51,000.
FII, retail, and proprietary traders’ sentiment
Foreign institutional investors (FIIs) were net sellers across most index futures on Thursday, offloading 8,776 contracts worth ₹405.40 crore. In Nifty futures alone, they sold 14,699 contracts, amounting to ₹868.11 crore, while Bank Nifty futures saw net buying of 6,848 contracts worth ₹517.91 crore.
The open interest (OI) data indicates a 13.1% rise in Nifty futures contracts held by FIIs, pointing to an increase in fresh short positions. Bank Nifty OI grew modestly by 2.4%, while MidCap Nifty OI declined by 3.4%. The FII long-short ratio for index futures stands at 0.30, indicating three short positions for every long position.
Retail investors, meanwhile, maintain a bullish stance, with their long-short ratio climbing to 2.13, implying over two long bets for every short trade. Proprietary traders appear more cautious, reducing their long bets as their ratio declined from 0.68 to 0.59.
Stocks under F&O ban today
Five stocks are under the F&O ban period today:
- Aarti Industries
- Aditya Birla Fashion Retail
- GNFC
- Granules India
- Hindustan Copper
Stocks in the ban period are prohibited from building new positions in the derivatives market due to surpassing set market-wide position limits.
More Read
Key takeaways for investors
- The Nifty’s immediate support zone at 23,500-23,540 is critical for determining its next move. A breach below could deepen the correction.
- Bank Nifty’s inverted hammer near support at 49,900 offers a glimmer of hope for a pullback.
- Options data for both indices suggests bearish sentiment, with caution dominating market behaviour.
- FII activity indicates a preference for short positions in Nifty futures, while retail investors remain optimistic.
As the market navigates through heightened volatility, traders and investors should closely monitor key technical levels and global cues to assess the next directional move.
